New Belgium Brewing company, makers of Fat Tire beer, sold their company – to their employees. Now an ESOP, New Belgium is experiencing significant growth and their culture is still going strong.
Learn how the decision to become an ESOP positively impacted business outcomes in this short video, part of the Return on Values Project.
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Additional Resources[su_spoiler title=”Video Transcript” icon=”arrow”]
SOLD: How New Belgium Brewing Sold the Company to the Employees – and Became More Successful in the Process
New Belgium Brewing Company
>> On screen text: Andrew Lemley, Government Affairs Emissary, New Belgium
>> Andrew: So up until 2013 we had 41 percent of the company in employee stock option plan. And at another all company meeting in 2013, Kim got up on stage and passed out envelopes to everyone and said we sold the company. And the air, as you can imagine, was completely sucked out of the room. And she said, if you open your envelope you’ll see who we sold the company to. So, holy cow…it’s kind of a big moment. So everybody opens their envelope and inside the envelope was a mirror to signify that we’d become a one hundred percent employee owned company.
>> On screen text: SOLD: How New Belgium Brewing Sold the Company to the Employees – and Became More Successful in the Process
>> On screen text: Kim Jordan, Founder, New Belgium Brewing
>> Kim: The driving value of the decision to sell the company to our co-workers was the people who were most likely to take the company into the future in a way that was consistent with what matters to me and what matters to my management co-workers because they were very involved in that process.
>> On screen text: Christine Perich, CEO, New Belgium
>> Christine: So we looked at every option available. Do you bring in equity? Do you go public? How do you…how do you do this thing and how do you do this thing in a way that on the other side you’re intact and you’re the company that you want to be.
Deciding to Go ESOP (Employee Stock Owned)
>> Kim: We looked at strategic buyers. We looked at management buy-outs. We looked at the ESOP. And we spent about three years really sort of researching, because you’d answer one question and another one would come up. And so after three years we felt like for New Belgium the best option was an ESOP buy-out.
>> Christine: And when we landed on the ESOP it was like, yep, that’s the ticket. That’s what we need to be doing. That’s the right thing for New Belgium.
>> On screen text: Selling the company to the employees has produced unexpected benefits.
>> On screen text: Victor Bejarno, Senior Financial Analyst, New Belgium
>> Victor: We have an all staff meeting every month where we openly share how we’re doing. Here’s how sales is doing. Here’s the profitability of our sales. Here’s how much we’re spending on sales and marketing, and that’s really great for everybody to understand that. I think, as employee owners, we do own the business so we have to know what drives a business.
How ESOP Changes Responsibility & Accountability
>> On screen text: Laura Latendresse, Health & Wellness Specialist, New Belgium
>> Laura: As an employee-owner, I feel like I have a bigger responsibility to watch how much I spend. I’m developing a wellness program. I need to make sure it’s gonna be effective…people are going to attend and the money I put into it is gonna be an investment and it’s gonna be well used.
>> On screen text: Lucie T., IT Project Manager Process Engineer, New Belgium
>> Lucie: Every dollar saved is a dollar of profit for every employee. There’s not a lot of waste here. You see us, when paper gets printed you see us turn around and use that as scrap paper. I mean, that’s one small example but we do that on a larger scale.
>> On screen text: Matty Gilliland, Production Project Analyst
>> Matty: And so then nobody has to hold them accountable because they’re not doing their job. They are invested in doing the best job they can.
>> On screen text: Jenny Briggs, Director of Organization Development & Human Resources, New Belgium
>> Jenny: Probably one of the biggest compliments I’ve ever had since I’ve been here. One of our POSSE members, which is ESOP misspelled backwards, was orienting a new co-worker and he introduced me. And he said…this is Jenny. He said, remember how I told you we don’t work for a corporation…we work for each other. She’s the one that makes that happen. And I teared up. We work for each other. We work for people. We’re committed to this idea of employee ownership and that we’re all employee owners. We work for each other and that’s a compelling reason to want to do a good job because we want to make life better. We want to increase each other’s wealth.
>> Christine: We’re all co-owners. We all do this thing together. There’s just a different level of working together you get in a company that’s co-owned than in any other capitalization strategy in my opinion. We talk to our auditors sometimes and they’ll say, what about your internal controls and making sure people aren’t stealing, and we sort of chuckle because we all hold each other accountable. There’s no sort of like sticking to the man, because you’re sticking it to yourself. Right. You’re an owner. I’m an owner. So it gives a very different way of running a business.
Ownership & Productivity
>> Jenny: Happy people are more productive people and there’s lots of academic research out there that says employee owned companies with an employee ownership culture are more successful over the long run than those that aren’t.
>> Christine: So when you empower people and you have ownership and you give them say, they show up differently and that absolutely goes to the bottom line.[end] [/su_spoiler] [su_spoiler title=”Discussion Questions for Exploring ESOP & Other Ownership Structures” icon=”arrow”]
Whether you’re rethinking your company’s formal ownership structure, or just want to create an environment where every employee is trained to think like an owner, the following questions can help you consider what’s right for your organization.
- What are the most important values, commitments, or missions we want to preserve, as the company explores new ownership structures? At the end of any transition, what do you still want to be true of your company?
- What decisions can I make now, to help preserve those values and commitments for posterity? In other words, how can our ownership structure make our company, along with its values and mission, more sustainable?
- Are my team members ready for the future? How have I prepared them for leadership? Will transitions come as a surprise to them? What can I do today to prepare all team members for the future?